The company’s assets are wide-ranging in the transport space, and cover trucking, rail, air, shipping and ports. It generates annual revenue of $8.2 billion and operates an extensive network of over 1,200 sites in 55 countries, with in excess of 45,000 employees.
The group is divided into six segments:
>> Toll Global Express
>> Toll Global Logistics
>> Toll Global Forwarding
>> Toll Specialized and Domestic Freight
>> Toll Domestic Forwarding
>> Toll Global Resources
TOL’s 1H13 results were solid given the challenging and volatile environment.
Group sales revenue was $4.5 billion for the six months ended 31 December 2012, up 2.5% on the prior corresponding period. Underlying EBIT over the six months was $256.4 million, up 3.3% from the 1H12.
Underlying net profit was also impressive, with TOL reporting a profit $173.5 million, a 7.6% climb on the prior year’s result. The strong result was due to better-than-expected cost pass-through, new business wins, and investment in depots and equipment.
From a valuation perspective, we think TOL is cheap. TOL looks to be trading on trough to mid-cycle earnings, with the company’s forward PE an attractive 12.7x.
This compares to competitors such as QUBE Holdings and Brambles, which trade on forward multiples of 19.4x and 17.9x respectively. A re-rating to a more reasonable forward multiple of 17x implies a value of $6.95 for TOL.
Today, TOL announced a $200 goodwill impairment of its Toll Global Forwarding business amid continued margin pressure. This is not really a shock to us, given the group had previously stated that this division in-particular was under margin pressure.
On a positive note, the group did reaffirm its full-year guidance for an EBIT of between $420 million to $430 million.
Despite the weak global forwarding business, the business is still able to reach its previous guidance, which is a testament to its diversified earnings base, which should put the company in good stead moving forward.